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USMEF looks for steady exports in 2013

While global economic uncertainty can change predictions at any moment, the U.S. Meat Export Federation (USMEF) looks for 2013 to be fairly steady in terms of pork and beef exports. The export trade group held its strategic planning meeting this week in Indianapolis.

While subcommittees discussed any number of issues surrounding U.S. meat export opportunities and challenges, market share and possible expansion, the federation’s staff and leadership offered some perspective to the media.

“With high feed prices and other production costs, it’s a difficult time for pork producers,” shared Danita Rodibaugh, USMEF chairman and Indiana pork producer. “It is more important than ever that we capitalize on opportunities in foreign markets to get the best return on each carcass and every single cut.”

So far in 2012, that return to U.S. pork producers has been running $56.50 per head, nearly $3 more than the record level of 2011, she noted. For beef, the return has been $212 per head, up 6 percent from year-ago levels, which has occurred despite a lower volume of sales.

U.S. pork exports have held strong through the first eight months of the year—up 2 percent in volume and 8 percent in value from 2011’s red-hot sales. “We hear a lot of talk about exports lifting our economy,” Rodibaugh says. “In that respect, pork is truly one of the nation’s pacesetters.”

“In the end, we expect 2012 to be close to 2011’s record exports,” said Phil Seng, USMEF’s president and chief executive officer, regarding all U.S. meat exports. “Not many industries can say that they are growing their market around the world.” In 2011, the United States exported $11.5 billion worth of meat to more than 100 countries.

“I cannot begin to tell you how important these results are to the bottomline of our operation and thousands like us across the United States,” Rodibaugh added.

So far, 2012 has been a good year, Seng noted. He pointed to the implementation of the three free-trade agreements— to South Korea, Panama and Colombia—as contributing to the positive trend.

The CODEX Minimum Residue Limits (MRL) passed in July is a “very important milestone,” Seng says, as it advanced the commitment to basing decisions on scientific results. Russia’s ascension into the World Trade Organization (WTO) also should level the playing field based on science. “Russia is now in the league of nations that is complaint with international (scientific) standards,” Seng notes. “Let’s hope that they play by the rules.

Looking at specific markets, Joel Haggard, USMEF senior vice president in the Asia/Pacific region, said that while the volume of U.S. product in these markets is down a bit, value is up, which means “customers are paying more for our meat.” He added, “overall, it’s positive if you look at historical trends, which continue to move upward.”

While China’s economy has slowed from its double-digital annual growth to something closer to 7 percent, Haggard said that Asian economies in general are “humming along.” “They are able to pay more for meat, and U.S. product is performing well,” he said.

China is aggressively building up its domestic pork production and supplies, so it’s unlikely U.S. pork will see a year-end surge in sales to China like it did last year, Haggard noted. But with such a big market, even seemingly small sales add up to a lot.

In Japan, U.S. pork’s No. 1 value market, USMEF sees opportunity in growing chilled pork product sales. Haggard said the U.S. product has performed well against Japan’s domestic chilled pork.

South Korea has rebuilt its swine herd much quicker than expected, following its 2010 foot-and-mouth disease outbreak. The country had culled one-third of its swine herd in response to the disease. An aggressive import program took place in 2011, but now South Korea is sitting with a large volume of pork on hand. Haggard added that the country will need to work through those supplies, but he expects pork imports to “stair-step” upward in 2013.

In other important pork markets, Mexico remains the largest volume market for U.S. product. Having faced a tough period, following a 2008 financial collapse, Mexico’s economic market has grown. However, it is just now back to 2008 levels, said Chad Russell, USMEF regional director for Mexico, Central America and the Dominican Republic. A major drought in 2011 forced the country to liquidate its cattle herd, and now with U.S. beef production down, beef affordability will be a big issue for Mexican consumers.

Add in recent issues regarding Mexico’s determination that the U.S. chicken sector dumped leg quarters onto its market, which means duties could be imposed in 2013. That would raise U.S. poultry prices and reduce shipments to Mexico.

In the end, it could all spell good news for U.S. pork as consumers move to less expensive protein options. Even though U.S. pork prices could run higher in 2013, Russell said exports to Mexico could increase by 4 percent.

As for other countries, Russell said Central America, while not a large market, is a fast-growing one with low tariffs and growth opportunities. Honduras and Guatemala are particularly strong markets for pork.

Looking to Russia, “It’s been a good year; we are very pleased with the terms Russia agreed to with the WTO,” said John Brook, USMEF regional director for Russia, Europe and the Middle East. Now, U.S. pork has duty-free access to the country.

But challenges remain, “Russia has a well-financed and active effort to become self-sufficient in pork and poultry,” Brook noted. On the other hand, the country is still dealing with African swine fever. Russia also has announced that it will test pork for ractopamine, which will be touchy since under WTO membership a country cannot set its own minimum test levels without providing the science to justify the action. “We’re encouraging the U.S. government to engage with Russia on this,” Brooks said, “we’re waiting to see how this plays out.

Turning back to the home-front, Seng emphasized that the farm bill uncertainty is a concern for U.S. meat exports as USDA’s Foreign Market Development Program and the Market Access Program are important to market development and expansion for the U.S. meat sector. Seng pointed out that $22 million of USMEF’s budget comes from USDA.

“We are blessed to have a very diverse organization and tremendous support,” he noted. Beyond beef, pork and lamb producers, soybean and corn growers support USMEF efforts through their checkoff programs. Packers, purveyors and traders along with farm and agribusiness organizations also help fund USMEF. “If (USDA) funding doesn’t come through, it looms very large in terms of what we can do internationally,” Seng said. “We do have contingency plans in place, but we hope Congress would reach a compromise for the greater good.”